Osun withdraws suit against CBN, AGF over disputed local government funds

Osogbo, Osun — In a dramatic turn in an ongoing legal tussle over local government allocations, the Osun State Government has withdrawn its high-profile suit against the Central Bank of Nigeria (CBN) and the Accountant-General of the Federation (AGF), Shamsedeen Ogunjimi.

The case, which sought to block the release of withheld funds to local government officials sacked by the courts during the administration of former Governor Adegboyega Oyetola, was discontinued on Friday, citing that the matter had been "overtaken by events."

The withdrawal was announced before Justice Emeka Nwite at the Federal High Court in Abuja, where Musibau Adetumbi, SAN, representing Osun State, informed the court that the suit's primary objective—to safeguard the disputed funds—had been rendered moot.

"On September 29, 2025, I told the court our aim was to safeguard the money. Between then and now, the money was moved out of the CBN," Adetumbi stated, emphasizing that the allocations had already been disbursed despite a pending status quo order.

He argued that pursuing the case further would amount to an "academic exercise," and the notice of discontinuance was filed under Order 51 Rule 2 of the Federal High Court Rules.

The suit stemmed from a contentious political dispute in Osun State, where Governor Ademola Adeleke's administration has clashed with remnants of the previous All Progressives Congress (APC)-led government under Oyetola. The funds in question—local government allocations withheld by the federal authorities—were earmarked for chairmen and councillors elected on the APC platform but removed by judicial rulings following Adeleke's 2022 victory.

Osun officials contended that releasing these funds to the ousted leaders would undermine the state's current local governance structure, whose interim administrators' tenures officially expired on October 16, 2025.

Representatives for the CBN and AGF, led by Muritala Abdulrasheed, SAN, and Tajudeen Oladoja, SAN, respectively, did not oppose the withdrawal. However, they raised objections to portions of the Osun government's supporting affidavit, labeling certain depositions as "damaging" and inaccurate, particularly claims against third parties not involved in the suit.

Abdulrasheed urged the court to expunge paragraphs 5 to 11 of the affidavit to prevent potential misuse, warning that certified true copies could later be weaponized against unnamed individuals. Oladoja echoed concerns that the AGF had not been afforded a full opportunity to respond before the funds' alleged release.

This development follows a recent ruling by Justice Nwite on October 16, dismissing preliminary objections from the CBN and AGF that questioned the Osun Attorney-General's locus standi to sue on behalf of the state's local governments.

The judge affirmed the AG's legal right to represent the councils, paving the way for the substantive hearing—now abruptly halted by the withdrawal. Earlier, on September 22, the Attorney-General of the Federation was struck from the suit after Osun discontinued claims against him, citing a parallel matter before the Supreme Court.

The case had broader implications for federal-state fiscal relations, highlighting tensions over how allocations are managed amid political transitions. Osun's move signals a potential de-escalation, though questions linger about the final disposition of the funds and any costs awarded.

Justice Nwite adjourned proceedings until October 29 for a formal ruling on the withdrawal application and ancillary requests, including the expungement of affidavit segments.

Governor Adeleke's administration has yet to issue an official statement on the withdrawal, but sources close to the government told Daily South Nigeria that it aligns with the government's efforts to refocus on development priorities.

Political analysts view the episode as emblematic of lingering post-election friction in Osun, where APC loyalists continue to challenge Adeleke's reforms.